America’s Most Splendid Housing Bubbles, May Update: Mania on the Eve of Holy-Moly Mortgage Rates

Bought in a panic as mortgage rates averaged 3.2% to 4.2%, just before the majestic peak.

By Wolf Richter for WOLF STREET.

Home price data released today by the S&P CoreLogic Home Price Index represents the three-month average of closed home sales that were registered in public registers in January, February and March, mirroring agreements reached a few weeks earlier, approximately in December, January and February, financed by mortgages previously pre-approved and whose rates were locked in from the moment they were pre-approved .

These rate locks were based on interest rates prevailing approximately from November to February, when the average 30-year fixed rate ranged from 3.2% to 4.2%, mostly below 3.8 % (green box in the graph). These are the rates that funded home purchases reflected in today’s home price index.

There have already been numerous indicators that the existing home sales and new home sales markets have struggled at current Holy-moly mortgage rates of over 5%, including significantly lower sales volume and an increase existing home inventory and a decline in sales and records. skyrocketing inventories in new homes.

But the data by the S&P CoreLogic Case-Shiller Francex released today and shown in the stunning charts below predates these changes in the market by several months and instead reflects the period when a mad dash was going on to lock in a mortgage rate before it climbed further, and to buy a home, any home, at any price, before the previous months’ rate lock expires.

The crazy race at the time.

The Case-Shiller National Overall Home Price Index for “March” released today (an average of closed deals recorded on public records in January, February and March) rose 2.6% from the previous month and a record 20.6% over one year. year.

San Diego Metro: Single-family home prices rose 3.7% in “March” (average of January, February, March) from the previous month, and 29.6% year-on-year. The index value of 417 means house prices have soared 317% since January 2000, when the index was pegged at 100.

This price increase amounts to 4.5 times the CPI inflation rate (+70.3%) since 2000. This majestic peak since January 2000, despite the dip in between, makes San Diego the most splendid number 1 real estate bubble on this list, followed closely by Los Angeles (+310%) and the incredible mania in Seattle (+301%):

All graphs here are on the same index scale as San Diego.

Los Angeles Subway: The Case-Shiller index jumped 3.3% in March from February and 23.2% year-over-year. With an index value of 410, real estate prices have exploded 310% since January 2000, despite the midpoint plunge, crowning the Los Angeles Metro the most splendid number 2 real estate bubble on this list:

Seattle Metro: House prices rose 5.6% for the month, taking the two-month high to 10.2%. Year-over-year, the index climbed 27.7%. Since January 2000, house prices have risen 302%, 4.3 times CPI inflation rate:

It’s house price inflation.

The Case-Shiller index is based on the “sales pair” method, comparing the price of a house when it sells in the current period to the price when it sold previously. It tracks how many dollars it took to buy the same house over time (methodology). The index incorporates adjustments for home improvements. By measuring the purchasing power of the dollar to buy the same house, the index is a measure of house price inflation.

San Francisco Bay Area (five counties including San Francisco, part of Silicon Valley, part of East Bay and part of North Bay): Housing prices rose 4.3% for the month, and 24.1 % year over year:

Miami Metro: The index climbed 3.6% for the month and 32.0% year-on-year, the fastest since November 2005, near the top of the housing bubble 1, before the epic of the real estate crisis :

Tampa Metro: Home prices soared 3.7% for the month and 34.8% year-over-year, a record high in metro Tampa, easily surpassing the wild peaks just before the collapse housing epic in Tampa:

Phoenix Metro: Home prices rose 3.0% for the month and 32.4% year-over-year, just slightly below the record year-over-year peak of the previous month, and the ninth consecutive month of more than -30% over one year. annual peaks:

Portland Metro: +2.9% over the month and +19.3% over one year:

Boston Subway: +2.6% over the month and +14.5% over one year:

Washington DC Metro: +2.9% over the month and +12.9% over one year:

Denver Metro: +4.5% over the month and +23.7% over one year:

Las Vegas Metro: +3.1% over the month and +28.5% over one year:

Dallas Metro: +4.3% for the month, and a record +30.7% year over year:

New York subway (a vast New York commuter distance market that Case-Shiller calls “New York Commuter”): +1.6% for the month and +13.7% year-over-year. At an index value of 263, the Metro has experienced house price inflation of 163% since January 2000, or 2.3 times the inflation rate of the CPI.

The remaining metros in the Case-Shiller index of 20 metros – Atlanta, Charlotte, Chicago, Cleveland, Detroit and Minneapolis – have all experienced substantial house price inflation since 2000, but that doesn’t quite match up to these splendid real estate bubbles. here, and therefore they did not qualify for this illustrious list.

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